Federal Communications Commission Chair Jessica Rosenworcel on Tuesday proposed to bar cable and satellite TV providers from charging consumers early-termination fees to exit contracts.
I mean, it’s either gonna be an up-front lump fee – which this legislation would induce – or paying in the form of a higher monthly fee over the course of the contract, which is the norm now.
I’m pretty sure that consumer preference is for the monthly fee, else so many companies wouldn’t have moved to no setup fee and amortizing the costs over a period of time.
But I’m not sure that it’s actually worse for the customer to have that up-front fee. No up-front fee plus a monthly fee is like taking out a small, unsecured loan from the service provider. In general, if you can afford to avoid taking out unsecured loans, you would probably rather.
The preference for no up-front fees matters if there are competing companies, one with an up-front fee and one without. Then the company without gets all the business. But this would ensure that all the providers have up-front fees, so it isn’t a factor from a competition standpoint. Well, maybe it’s a factor to the extent that they’re competing with Netflix or similar. But it won’t disadvantage a company against other cable companies.
I’m pretty sure that consumer preference is for the monthly fee, else so many companies wouldn’t have moved to no setup fee and amortizing the costs over a period of time.
It’s more that companies have figured out that monthly/subscription fees make them more money than lump sum, even when the product is identical. It’s why we’ve seen things like Microsoft Office 365 replace their previous single-purchase model
I mean, it’s either gonna be an up-front lump fee – which this legislation would induce – or paying in the form of a higher monthly fee over the course of the contract, which is the norm now.
I’m pretty sure that consumer preference is for the monthly fee, else so many companies wouldn’t have moved to no setup fee and amortizing the costs over a period of time.
But I’m not sure that it’s actually worse for the customer to have that up-front fee. No up-front fee plus a monthly fee is like taking out a small, unsecured loan from the service provider. In general, if you can afford to avoid taking out unsecured loans, you would probably rather.
The preference for no up-front fees matters if there are competing companies, one with an up-front fee and one without. Then the company without gets all the business. But this would ensure that all the providers have up-front fees, so it isn’t a factor from a competition standpoint. Well, maybe it’s a factor to the extent that they’re competing with Netflix or similar. But it won’t disadvantage a company against other cable companies.
It’s more that companies have figured out that monthly/subscription fees make them more money than lump sum, even when the product is identical. It’s why we’ve seen things like Microsoft Office 365 replace their previous single-purchase model